Business is booming… in the suburbs! Restaurants are moving from the city to the neighborhood as customers STILL work from home
- Shoe shiners in Chicago and movie theaters in Manhattan are shutting down, but suburban retailers are booming as workers spend their money closer to home
- The average office occupancy rate in 10 major U.S. cities is half what it was before the pandemic. Urban pedestrian footfall decreased by 25% in April compared to 2019
- Suburban malls report record rents as restaurants move where the mouths are
Business in the suburbs is booming as restaurants are relocating because customers are still working from home.
The average office occupancy rate in 10 major U.S. cities is half what it was before the pandemic. Visitor frequency in urban inner cities fell by a quarter in April compared to the same month in 2019.
Restaurants and shops are now buying up suburban properties to target the new hotspots. Mall owner Retail Opportunity Investments said 98 percent of its portfolio was leased in the first quarter of this year despite brutal inflation and rising interest rates.
Fast-food chain Dig recently opened new eateries in the suburbs. CEO Tracy Kim told The Wall Street Journal, “We just want to be where the mouths are, whether it’s at home or in the office.”
Before the pandemic, they targeted the office lunch crowds at locations in Manhattan, Boston, and Philadelphia.
A busy shopping mall in Troy, Michigan on a weekday afternoon in November 2022
Empty retail space along Queens Boulevard, Forest Hills, New York
But in the past few weeks, they’ve opened new takeaways in Stamford, Connecticut, Bridgewater, NJ and Georgetown, Washington, DC
“There’s a fixed part of the work base that will never come back to the office five days a week,” Kim said.
For smaller companies, however, relocation is not an option.
Hanna Shunnarah, owner of Beehive Shoeworks under the L Rails in downtown Chicago, has to hope the workers will one day return.
The shoe repair shop was recently forced to apply for hardship compensation on a $500,000 Small Business Administration loan it took out during the pandemic.
“Monday and Friday the trains are mostly empty,” Mr Shunnarah told the WSJ. “No one comes down these days.”
He has reduced his staff from 16 to eight.
In the Big Apple, food is given out for free in hopes that office workers might head into town for a tasty lunch.
The busy Aventura Mall in Miami, Florida
Sam Lipp, president of Tortazo, which has two Mexican restaurants in Manhattan, told the Journal, “We’re giving out churros and giving away lots of free guacamole.”
His Madison Square Park branch only welcomes 250 customers for lunch on weekdays, which is just 60 percent of what he had before the virus.
Larger chains like Sweetgreen salad shop have significantly expanded their suburban operations, closing several locations in Los Angeles, Boston and New York City in the past year.
The company said it won’t abandon cities, but now half of its stores are outside cities, up from around a third at the end of 2019.
Late last year, city retail supply surpassed that of the suburbs for the first time since at least 2013, according to real estate firm CBRE.